Green Book June 2011
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Featured Articles
Accelerating Inflation And Stock Returns
Periods of accelerating inflation generally lead to lagging stock market performance.
Adding Pharmaceuticals: Cheap Stocks
Within the Select Industries portfolio, a new holding was established in the Pharmaceuticals group, boosting Health Care exposure in this equity portfolio to an overweight 34% (versus S&P 500 weight of 12%).
Another Walk On The Short Side
In mid-May, we re-initiated a short position across all three tactical funds in U.S. Treasury bonds.
Assessing Stock Market Valuation Tools: Which Work—And Which Don’t?
“Of Special Interest” this month evaluates several stock market valuation techniques. Newfangled valuation techniques do not always lead to better results.
Despite Falling Commodity Prices, Inflation Still Expected To Accelerate In 2011
Latest PPI month/month increase was +1.2%, however the latest report is a measure of inflation from mid March through mid April and does not include the impact of the plunge in commodity prices.
Does The “Beta Breakdown” Matter?
Significant pull-back in High Beta stocks, but the weakening bid does not necessarily spell the end of the bull market.
Factor Performance Since 2009 Lows: Reversals Everywhere
Graphical representation of the difficulty since the March 2009 market bottom. Not many factors have been effective.
Longer Term Concerns About U.S. Debt And Deficit
More than one-half of the U.S. government’s additional $9 trillion in debt expected over the next ten years is projected to be interest. This is a frightening proposition.
MTI Goes Neutral; Next Few Weeks Critical
For now, net equity exposure in both the Core and Asset Allocation Portfolios will remain around 60%, as we wait to see what happens to this analysis in coming weeks.
Mutual Fund Outflow Played Significant Role In MTI Deterioration
Mutual fund outflow played significant role in Major Trend deterioration. There have been about 6 1/2 months where the four week average has shown net inflow to U.S. equity funds, but outflow is now accelerating as three of last four weeks have seen net outflow.
Now Entering Increasing Risk Aversion Environment
Risk Aversion Index accelerated in May, making it prudent to favor defensive assets near term. Expect small and gradual increase in long term interest rates.
Still Paying The Price For (Illusory) Prosperity
Housing data is so far following the picture-perfect path of a bubble aftermath. Based on other bubbles, the next cyclical top in housing will likely occur at astonishingly low levels.
Table of Contents
Stock Market
- MTI Goes Neutral; Next Few Weeks Critical
- Does The “Beta Breakdown” Matter?
- Still Paying The Price For (Illusory) Prosperity
- Another Walk On The Short Side
- Mutual Fund Outflow Played Significant Role In MTI Deterioration
- Accelerating Inflation And Stock Returns
Of Special Interest
Macro Monitor
Equity Strategies
Quant
Inflation Watch
Accelerating Inflation And Stock Returns
Periods of accelerating inflation generally lead to lagging stock market performance.
Adding Pharmaceuticals: Cheap Stocks
Within the Select Industries portfolio, a new holding was established in the Pharmaceuticals group, boosting Health Care exposure in this equity portfolio to an overweight 34% (versus S&P 500 weight of 12%).
Another Walk On The Short Side
In mid-May, we re-initiated a short position across all three tactical funds in U.S. Treasury bonds.
Assessing Stock Market Valuation Tools: Which Work—And Which Don’t?
“Of Special Interest” this month evaluates several stock market valuation techniques. Newfangled valuation techniques do not always lead to better results.
Despite Falling Commodity Prices, Inflation Still Expected To Accelerate In 2011
Latest PPI month/month increase was +1.2%, however the latest report is a measure of inflation from mid March through mid April and does not include the impact of the plunge in commodity prices.
Does The “Beta Breakdown” Matter?
Significant pull-back in High Beta stocks, but the weakening bid does not necessarily spell the end of the bull market.
Factor Performance Since 2009 Lows: Reversals Everywhere
Graphical representation of the difficulty since the March 2009 market bottom. Not many factors have been effective.
Longer Term Concerns About U.S. Debt And Deficit
More than one-half of the U.S. government’s additional $9 trillion in debt expected over the next ten years is projected to be interest. This is a frightening proposition.
MTI Goes Neutral; Next Few Weeks Critical
For now, net equity exposure in both the Core and Asset Allocation Portfolios will remain around 60%, as we wait to see what happens to this analysis in coming weeks.
Mutual Fund Outflow Played Significant Role In MTI Deterioration
Mutual fund outflow played significant role in Major Trend deterioration. There have been about 6 1/2 months where the four week average has shown net inflow to U.S. equity funds, but outflow is now accelerating as three of last four weeks have seen net outflow.
Now Entering Increasing Risk Aversion Environment
Risk Aversion Index accelerated in May, making it prudent to favor defensive assets near term. Expect small and gradual increase in long term interest rates.
Still Paying The Price For (Illusory) Prosperity
Housing data is so far following the picture-perfect path of a bubble aftermath. Based on other bubbles, the next cyclical top in housing will likely occur at astonishingly low levels.
Stock Market
- MTI Goes Neutral; Next Few Weeks Critical
- Does The “Beta Breakdown” Matter?
- Still Paying The Price For (Illusory) Prosperity
- Another Walk On The Short Side
- Mutual Fund Outflow Played Significant Role In MTI Deterioration
- Accelerating Inflation And Stock Returns
Of Special Interest
Macro Monitor
Equity Strategies
Quant
Inflation Watch
Perception for the Professional
March 2026 Issue
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Sector Navigator
March 2026 Issue
